Election Uncertainty Unsettles Markets

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What's Happening Today

Yesterday, I wrote that markets and investors like political division. That's because gridlock means it is difficult for any party to enact major laws and policies that could have a huge impact on businesses—like taxes. While markets like division, the one thing they don't like is uncertainty. Investors went into election day yesterday with projections suggesting Republicans would snap up control of the House. But forecasts can be wrong, and as the dust clears after yesterday's vote, the future of Congress is anything but clear.

Both parties are currently neck and neck for control of the House and the Senate as the last votes get tallied. If Democrats manage to maintain control, the administration could have an easier time passing proposals like raising taxes on Big Oil and the wealthiest Americans, and making decisions on government spending and the debt ceiling.

With yesterday's election still undecided, markets are lower as optimism from earlier this week wanes.

But even more important to markets than these election outcomes could be tomorrow's inflation reading. The Consumer Price Index (CPI) is expected to have dropped from an annual rate of 8.2% to 7.9% last month, but its still uncomfortably high. If inflation remains stubbornly high, then investors could expect that the Federal Reserve will continue to hike interest rates at an aggressive pace at its meeting next month. This would make loans more expensive, increase the likelihood of a recession, and eat away at future corporate profits—all of which will either hurt your wallet, your investments or both.

With all the uncertainty about the elections and the Fed's future moves, you shouldn't be too surprised if stocks whipsaw between green and red.

- Kristin

Editors' Picks

Some Investors Bet Fed Could Lift Rates to Two-Decade High (The Wall Street Journal)

Inflation, Abortion Top Issues for U.S. Voters Casting Midterm Ballots, Exit Poll Finds (Reuters)

Crypto Markets Tumble to 2-Year Lows on FTX Contagion Concern (Bloomberg)

How to Manage Investment Risk in Retirement (The Balance)

Weekly Mortgage Demand Flattens, as Interest Rates Climb Higher to 7.14% (CNBC)

How and When To Apply for Medicare (The Balance)

Gift Tax: How Much Is It and Who Pays It? (The Balance)

Term of the Day

Medicare

Medicare is the federal government's health care program for the elderly and the disabled. You'll typically be enrolled in Original Medicare (Parts A and B) automatically if you're receiving Social Security benefits. This program provides hospital and medical insurance that can help pay for the care you need. Medicare Part B could help pay the bill if you're 65 or older and need to see your doctor because it covers preventive and diagnostic services. You'd use Medicare Part A, which covers hospital stays, if you fall ill and need temporary inpatient care.

Medicare can help lower your out-of-pocket health care costs, but it doesn't cover all medical expenses. You can address some of these gaps by applying for a Medicare supplement (Medigap) policy or a Medicare Advantage plan.

Off the Charts

Mortgage rates have climbed as the Federal Reserve raises rates to curb inflation, with the average rate on a 30-year fixed-rate mortgage above 7% for the third consecutive week at 7.14%, up from 7.06% the week before, according to the Mortgage Bankers Association.